In this feature, InCompass IP director Yannie Chan shares her insight on this process and its importance to many industries.
Why is it highly recommended that an organisation obtain a freedom-to-operate opinion before launching a new product or service?
A freedom-to-operate (FTO) opinion is a legal opinion provided by a patent attorney or lawyer based on an FTO search for issued patents related to a product or a service with the aim to assess any potential infringement of the patent rights of other parties. An FTO search typically also involves identifying pending patent applications which may give rise to a potential risk once issued.
Companies of all sizes and areas of technology have, over the years, become more aware of the importance of protecting their inventions from being ‘copied’ or their patents being infringed by others, including their competitors. However, previously, the same level of vigilance was not always observed to prevent their products or services from breaching third parties’ intellectual property rights. This exposes the companies to potential risks of patent infringement disputes or litigation, which are well known to be expensive and time-consuming.
We generally recommend our clients obtain an FTO opinion during the research and development stage of a new product or service or before launching the new product or service to the market, especially for products or services considered as being commercially important and also where they are competing closely with competitors.
The FTO opinion may not only allow them to make more informed decisions during the development stage, such as by modifying their inventions to design around existing patents to avoid potential infringement risk, but also useful for the clients to identify potential key patents in the relevant field to minimise any patent-infringement risks or to take the appropriate action in advance to mitigate such risks. For example, the FTO opinion may help clients from having to withdraw or recall products or services from the market due to infringement disputes, which may financially damage the business as well as damage relationships with customers, distributors and other business partners.
We therefore see the FTO clearance process as an important step, if not a crucial step, prior to launching a new product or services to the market by a company.
We generally recommend our clients obtain an FTO opinion during the research and development stage of a new product or service or before launching the new product or service to the market.
What is the general process involved in conducting a patent search and producing a freedom to operate (FTO) opinion?
In general, patent searches will be conducted based on the subject product or service to identify relevant issued patents and pending patent applications in the jurisdiction or jurisdictions concerned, such as where the product or service is going to be imported, manufactured, marketed, offered for sale or sold.
The searches may include keywords searches based on key features of the product or process concerned and the corresponding classifications, such as the International Patent Classification (IPC) and USPTO patent classification. Some searches may require further searches based on details of assignees and/or inventors of the relevant prior art technology known to the clients.
We suggest that both pending patent applications and granted patents are covered by the searches to ensure a more comprehensive coverage of searched subject matter in the relevant jurisdictions. As mentioned, the searches should be focused on the jurisdictions where the business activities for the product or service are required. However, we should also consider any international patent cooperation treaty (PCT) patent applications which are still within the time limits for national phase entry – i.e. within 30-32 months from the first filing date or priority date in general – for any potential national phase patent applications filed or to be filed in the jurisdictions concerned.
The patent documents identified by the searches should be analysed by a patent attorney or suitably qualified lawyer to assess if the subject product or service is considered to fall within the scope of any claims of the patent documents. An opinion on the potential infringement risk based on such analysis will then be produced.
What are the most common obstacles or setbacks that IP attorneys like yourself encounter during this process?
First, patent searching is by nature an inexact process and it is always difficult, if not impossible, to guarantee that any particular search is exhaustive of all potentially relevant documents. For example, patent applications are generally published 18 months after their filing or priority date, and we should therefore be mindful that a search will not be able to locate any applications which are not yet published at the time the search is carried out. A follow-up search within at least 18 months after may therefore be advisable if a high-confidence FTO process is required.
In addition, the accuracy and completeness of searches based on publicly available patent databases are also subject to the accuracy and completeness of those databases and the patent subject matter classifications. Follow up searches may help in identifying any discrepancies due to differences in records from different patent databases.
Patent searching is by nature an inexact process and it is always difficult, if not impossible, to guarantee that any particular search is exhaustive of all potentially relevant documents.
During the FTO analysis of the search results, care is required in construing the scope of the claims of issued patents or patent applications discovered in the FTO search(es) to take account of legal precedents on claim language construction in the relevant jurisdictions and to account for legal doctrines such as the doctrine of equivalents. Some of the terms or expressions from the claims may seem on their face to have a plain meaning, but analysis of the claim language must consider the broadest reasonable interpretation of the claim language and the content of the issued patent or patent application being assessed.
For any claims with terms or expressions which are deemed ambiguous, care must be taken to try and ascertain what was intended in the patent specification, but alternative constructions resulting from any ambiguity must be considered. This is to minimise any potential risks that the claim language may later be given a broader or different meaning from that which is considered pertinent.
Have you observed any significant changes in the demand for FTO opinions during your time in practice? Has this increased in certain sectors?
FTO opinions are often required by the pharmaceutical industry and the demand has remained high over the years.
For example, we have conducted a considerable number of freedom-to-operate analyses for generic drugs imported for supply by the hospitals here in Hong Kong. The Hong Kong Health Authority requires FTO opinions to be presented when a generic drug is being offered for sale in Hong Kong. In our experience, FTO analysis is highly valued by our colleagues in the pharmaceutical industry due to the high costs in developing new drug products and the long period of time required for the R&D and clinical studies to be conducted prior to bringing new drugs into the market.
Another sector is the telecommunications industry – also due to the high costs of product or service development and the high value of many such products and services. It is also common for some manufacturing companies such as power tool or electric motor manufacturers to obtain FTO opinions as, for these products, the variations from one product to another could be small but significant enough to give rise to expensive infringement risks.
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Do you have any advice for less experienced patent attorneys on providing FTO opinions?
FTO analysis involves the formulation of search strategies and the interpretation of patent claims which are complex tasks. It can be useful to seek a second opinion from an experienced patent attorney colleague when conducting the FTO analysis, especially when the claims of the potential conflicting patents are not direct or clear. It is also imperative to obtain sufficiently detailed information from the client about the subject matter that the opinion is based on to facilitate a thorough analysis.
Yannie Chan, Director
Unit 205, 2/F, Building 19W, 19 Science Park West Avenue, Hong Kong Science Park, Pak Shek Kok, New Territories, Hong Kong
Tel: +852 2607 4308 | +852 2607 4272
Fax: +852 2607 4457 | +852 2607 4282
E: Yannie.Chan@inCompassIP.com
Yannie Chan is a professionally qualified Patent Attorney in Australia and New Zealand, and a registered Trade Mark Attorney in Australia and director and partner at InCompass IP Limited. She is experienced in drafting, filing and prosecuting patent applications in various major jurisdictions, and has provided numerous patent infringement, freedom to operate, and validity opinions for clients. She is also recognised by leading IP publications such as the IP Lawyers as the recommended IP practitioner in Hong Kong for 2023.
InCompass IP Limited comprises a team of Hong Kong- and London-based attorneys who provide international IP services to clients locally and worldwide. The firm’s services include filing and prosecuting patents, trade mark applications, drafting of patent specifications, trade mark searches, patentability and infringement searches and opinions. The InCompass IP team is experienced in securing IP rights for clients across a broad range of industries.
